In an effort to address housing shortages and promote affordable living solutions, Colorado is set to launch a comprehensive program aimed at assisting homeowners in constructing Accessory Dwelling Units (ADUs). This initiative, established under House Bill 24-1152, focuses on providing financial support through down payment assistance and low-interest loans, making ADU development more accessible to low- and moderate-income residents.
House Bill 24-1152: Empowering Homeowners
Signed into law in May 2024 by Governor Jared Polis, House Bill 24-1152 is designed to incentivize the construction of ADUs across Colorado. The legislation allocates $8 million to the Colorado Economic Development Commission, which is tasked with contracting the Colorado Housing and Finance Authority (CHFA) to manage several supportive programs:
- Interest Rate Reduction Program: This component focuses on buying down interest rates for loans issued to eligible low- and moderate-income homeowners undertaking ADU projects.
- Down Payment Assistance: Homeowners can receive financial aid to cover down payments associated with ADU construction, reducing initial financial barriers.
- Credit Enhancement Program: Designed to support lenders in offering affordable loans, this program provides credit enhancements, encouraging financial institutions to participate in ADU financing.
- Support for Non-Profit and Community Organizations: The bill facilitates loans, revolving lines of credit, or grants to non-profits, public housing authorities, and community development financial institutions. These organizations, in turn, offer direct support to homeowners or tenants involved in ADU projects.
Enhancing Housing Equity and Availability
The primary objective of this initiative is to increase the availability of affordable housing by empowering homeowners to build ADUs. By providing financial assistance and reducing bureaucratic hurdles, Colorado aims to:
- Expand Affordable Housing Options: ADUs offer a viable solution for increasing housing density without the need for extensive new infrastructure.
- Generate Additional Income for Homeowners: Renting out ADUs can provide homeowners with a supplementary income stream, enhancing financial stability.
- Promote Sustainable Land Use: Encouraging the development of ADUs supports efficient land use and can contribute to the preservation of open spaces.
Anticipated Implementation
While specific application details are forthcoming, the program is expected to roll out in alignment with the effective date of House Bill 24-1152 on June 30, 2025. Homeowners interested in participating should monitor updates from the Colorado Housing and Finance Authority and local government announcements for application guidelines and eligibility criteria.
By facilitating the construction of ADUs, Colorado's upcoming support program represents a strategic effort to enhance housing affordability and accessibility, fostering more resilient and diverse communities across the state.
